On 1 June 2014, a new amendment to the Civil Code and some other acts will come into force, enacting usury as a new reason for absolute invalidity of a legal act, along with some changes to consumer agreements.
The introduction of civil usury will invalidate any legal act done by a natural person who is not an entrepreneur, whereby someone abuses predicament, inexperience, level of mental development, distress, gullibility, carelessness, financial dependence or inability to meet commitments of the other party and accepts the promise for himself or for another person of the provision of a fulfilment, which is grossly disproportionate to the mutual fulfilment.
This approach draws on the historical development and definitions of criminal usury, but extends it to reflect subjective characteristics of the victim making them prone to exploitation.
Other changes include:
- invalidation of the consumer agreements containing, according to the decision of the respective court, unacceptable contractual provision as cited in the verdict of the decision, which was concluded by using usury or unfair business practices
- specification of the maximum amount repayable by consumers, as well as the minimum font size to be used in consumer agreements, general terms of business and other documents of a contractual nature relating to consumer agreements (to be specified in implementing regulations)
- prohibiting the provision of consumer credit in the form of cash and treating any such arrangement as free of any interest or charges
- requiring consumers to be informed in writing or by text message (SMS) within 15 days of the due date that a payment owed under a consumer credit agreement is overdue and payable
Please contact us for more detailed information or advice about these changes or their impact on your business.
Law: Act No. 106/2014 Coll. amending (a) the Civil Code, (b) the Consumer Credit Act (No. 129/2010 Coll.), (c) Act No. 128/2002 Coll. (d) the Consumer Protection Act (No. 250/2007 Coll.), (e) the Voluntary Auctions Act (No. 527/2002 Coll.), (f) the Code of Civil Procedure and (g) the Rules of Execution Procedure.